The Democrats’ newfound comfort level with stronger government intervention in the economy will be on full display this week in both chambers of Congress. In the House, Democrats will force votes on an energy bill that raises taxes on big oil by rolling back $18 billion in subsidies and tax breaks pushed through by the last Republican Congress. In the Senate, Majority Leader Harry Reid (D-Nev.) has called votes on a sweeping housing bill that includes a provision — vehemently opposed by the mortgage industry — to allow judges to unilaterally restructure certain mortgages to create friendlier terms for homeowners facing foreclosure.
And that’s just the beginning. In both the House and the Senate, liberal Democratic committee chairmen who felt restrained during the economic boom of the Clinton White House years suddenly find themselves free to pursue classic progressive causes that were off the table not so long ago.
“Recent economic policies have ignored large segments of the population, so what we’re seeing now reflects a new set of priorities to focus on, and help, those individuals and families,” said Matthew Beck, a spokesman for the House Ways and Means Committee, which wrote the energy tax bill. “To the extent you label it ‘populism,’ you do so because a growing number of people care deeply about these issues.”
The coalescing of the Democratic congressional agenda with the Democratic presidential campaign was destined to happen, but the confidence with which congressional leaders are touting a populist outlook shows just how strong Democrats believe their message is this election year. It’s got business lobbyists and the GOP leadership working overtime, and it has the potential of putting rank-and-file Republicans in a tough spot: How do you vote against Democratic proposals without appearing insensitive to your constituents’ economic worries?
Rep. John Porter (R-Nev.), whose state has the highest rate of foreclosure in the country, is struggling to chart his own ideas and solutions, but he’s caught between the hands-off, free market principles of his party’s leadership and what he sees as the heavy-handed government intervention being pushed by Democrats. Porter now has a staff member in Nevada devoted full time to helping people figure out how to avoid foreclosures.
“My concern is, whatever we do, it’s going to take months of debate,” Porter said. “I don’t think we need to do a major government intervention. ... We need solutions.”
Republicans and Democrats worked together to pass an economic stimulus bill earlier this month. But Rep. Tom Feeney (R-Fla.), whose state has the second-highest rate of foreclosures in the country, says Republicans now need to stand firm against the Democratic agenda even if it costs them votes in their districts.
“The battle is between populist demagoguery and economic reality,” Feeney said. “Democrats are trying to establish a second New Deal — more regulations, progressive taxation. ... Is there pressure to say we’re doing something? Yes. But no situation is so bad that Congress can’t make it worse.”
While no one in Congress is suggesting a 21st-century version of the Tennessee Valley Authority of the Works Progress Administration, the ideas making their way through House and Senate committees now are also a far cry from those that dominated during the Clinton years, when reforming welfare, cutting the deficit and passing NAFTA were among the biggest economic policy accomplishments.
Under this Democratic Congress, free trade agreemnts have stalled. There’s no talk of kicking people off welfare. And Congress ignored the good-government budgeting policy known as “pay-go” — pay as you go — in the case of major expenditures like this month’s $150 billion economic stimulus bill.
Senate Banking Committee Chairman Chris Dodd (D-Conn.) has proposed resurrecting the Depression-era Home Ownership Preservation Corp., creating a new agency that would purchase delinquent mortgages and restructure them into more affordable loans. In the House, Government Reform Committee Chairman Henry A. Waxman (D-Calif.) will hold a hearing Thursday to illuminate and undoubtedly criticize the salary packages for CEOs of major mortgage companies.
House Financial Services Committee Chairman Barney Frank (D-Mass.) has already pushed through new rules for mortgage lending, regulations that consumer advocates and Democrats advocated for years to no avail when the Republicans held the majority. And under his leadership, Democrats on the House Financial Services Committee are moving forward with stiff legislation to curb the lucrative billing practices employed by powerful credit card companies.
Highlighting the impact of the economic downturn on real people, House Speaker Nancy Pelosi’s office has pointed to higher energy costs as a cause for the increased price of food for the working poor, releasing a chart last week that detailed the cost of eggs, milk and cheese.
And with one stimulus package already signed into law, Democrats are ready to push now for extensions of unemployment insurance, infrastructure spending, food stamps and other economic safety net proposals.
Business lobbyists are pushing back against this new wave of economic populism by questioning both the wisdom and the sincerity behind it. “Every four years, we hear ‘populism’ on the campaign trail,” said Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce. “I can’t say I’m shocked, nor am I surprised that we hear ‘populism,’ particularly when the economy has now superseded Iraq as the No. 1 concern in public opinion polls.”
Josten said that it’s not unusual for congressional caucuses to tack toward their party’s candidate but that the rhetoric tends to temper as candidates move into the general election and, more so, when they enter the White House.
But with roughly two-thirds of Americans saying that the county is already in a recession, Democrats believe that things may be different this time. “Democrats are liberated to talk about a populist message. ... It’s the federal government reaching down, very aggressively, to the street level to help people,” said Chris Lehane, a Democratic consultant who worked with the presidential campaigns of John F. Kerry and Al Gore. “It’s difficult for Republicans ideologically to approach these issues.
Republicans are in a dark, unspinnable place on economic issues.”
“When people’s paychecks go down because they let tax cuts expire, they’ll say, ‘Maybe Republicans aren’t so bad,’” said one Senate GOP leadership aide. “There is potential for [Democrats] to go too far.”
See Page 8 for more on the controversy over the Democrats’ housing bill.